PM asks states to consider waiving mandi, local taxes

New Delhi: Prime Minister Manmohan Singh on Friday asked states to consider waiving mandi, octroi and local taxes for taming inflation which affects poor "harder" and poses serious threat to the country`s growth momentum.

He said much of the responsibility for checking price rise lies with the states.

"Much of what needs to be done ….lies in the domain of state governments… There seems to be a strong case for waiving mandi taxes, octroi and local taxes, which impede the smooth movement of essential commodities," Singh said addressing chief secretaries of states here.

Stressing on the need for a paradigm shift in the institutional arrangements, he pressed the states for reviewing functioning of the Agricultural Produce Market Committee Acts (APMCAs) On "an urgent basis".

Underscoring the role of super stores, the Prime Minister said the storage facilities have to be augmented and "supply chains need to be dovetailed with the organised retails for quicker and more efficient distribution of farm products".

Driven by high prices of fruits, milk, meat, eggs, India`s food inflation crossed 17 per cent for the week-ended January 22.

While the Indian economy is projected to grow by 8.8-9.0 per cent this fiscal, inflationary concerns are looming over the growth prospects.

However,the Prime Minister partly attributed the rise in prices of "superior food products" to rising income level and "corollary of faster growth ".

Singh said the lasting solution for price inflation lies in increasing agricultural productivity and production not only of cereals but also of pulses, oilseeds, vegetables and fruits and augmenting the supply of milk and milk products, poultry, meat and fish.

He said while the Centre would provide support for checking inflation.

"Each state has to work out a suitable plan of action suited to its requirements and its capabilities."

He said though various social sector programmes for the empowerment of the poor and the disadvantaged have met with reasonable success, "there is a perception that the schemes do not provide the intended benefits to them in full measure on account of leakages and at times tardy implementation."

Singh also asked the Chief Secretaries to explore ways and means by which the infrastructure deficit in the states could be bridged.

"While we have made some progress in the last six-and-a -half years in improving our infrastructure and tried new models like the Public Private Partnership, much more needs to be done and it has to be done on a priority basis," he said.